SOA spend up despite unclear benefits

The number of companies investing in service-oriented architecture (SOA) has doubled over the past year in every part of the world, with a typical annual spend of nearly $1.4 million, according to a new research report from the analyst firm AMR Research that surveyed 405 companies in the U.S., Germany, and China.

And SOA is used in a variety of industries; 59 percent of retailers have actually used SOA in at least one project, as have 58 percent of distributors, 54 percent of telecoms, and 42 percent of financial services firms. Financial services spend the most on SOA; 63 percent spend more than $1 million, followed by retail with 30 percent spending at least $1 million.

That’s the good news.

A mishmash of benefits drives SOA but could slow broad adoption Now the bad news: “Hundreds of millions of dollars will be invested pursuing these markets in 2008, much of it wasted,” said AMR analyst Ian Finley.

The AMR survey found that most companies don’t really know why they are investing in SOA, which Finley said makes long-term commitment iffy. Often, there are multiple reasons cited within any organization, letting SOA appear as a buzzword justification for unrelated individual priorities. “People more easily rally around a thing rather than five things,” Finley said. That lack of a rallying purpose for SOA calls its momentum into question, he added.

AMR’s survey shows the diversity of motivators for SOA investments; 16 percent do so to build IT skills in an important new technology area, 18 percent because they believe SOA is the best technology to meet requirements of an individual project, 17 percent do so to reduce IT costs through reuse, 22 percent use SOA to change systems faster, more cheaply, and with less risk, and 14 percent use SOA to modernize their system architecture.

But Finley is concerned that SOA may not get picked up much beyond the early adopters — mainly financial services, telecommunications, and government organizations that are more often than not predisposed to the value of architecture and thus more willing to pursue SOA for less-quantifiable benefits — unless a coherent set of benefits is made clear. (Retailers are also early adopters, though mainly as an integration mechanism, not as much for new initiatives, he noted.)

“If we can crystallize the key benefits, other people may follow on,” he said. Because SOA affects multiple parts of an organization, Finley said that the specific benefits will be different for the CFO, CIO, software developer, and business unit managers. “There doesn’t need to be one common benefit, but these individual benefits should be interlinked,” he recommended.

Agility, not reuse, is the real benefit seen Another danger seen from the SOA survey is that the main benefit that the vendors sell around SOA — code reuse — is not the real benefit that early SOA adopters have gotten. Often the code from project A is irrelevant to project B, he noted. That focus on reuse can cause organizations to dismiss SOA’s benefits because they’re looking at the wrong metric, Finley said.

Early adopters have discovered a harder-to-measure but more practical benefit to SOA: increased agility, Finley said. “Agility” in this context means being able to deploy new projects faster based on having adopted SOA as the fundamental approach to IT, in turn letting the business reap benefits from its IT initiatives faster.

Finley noted that the projects don’t happen faster because of code reuse. Instead, it is the changed mind-set that SOA brings to development and management of technology as a whole that provides the real benefit, Finley said.

SOA adopters do typically see that improved agility, regardless of what led them to SOA, Finley said: “Very few decide it’s not worth it.”